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US-based pharmacy benefit manager Express Scripts saw its shares dive in after-hours trading following an announcement that US health insurer Anthem intends to move its business when its current contract expires at the end of 2019, amid a legal dispute between the two companies.
Express Scripts’ shares fell nearly 11 per cent in extended trading after a trading halt was lifted. The 10-year contract with Anthem, which began in 2009, generated approximately $2.2bn and $1.9bn of Express Scripts’ adjusted EBITDA in 2016 and 2015, respectively, the company said.
Although conversations “have been ongoing”, Express Scripts said that it was informed by Anthem management that it intended to move its business when the current contract is up.
Express Scripts has been in a legal dispute over its contract with Anthem, one of the five large US health insurers, which claimed that the PBM had been overcharging it by billions of dollars.
PBMs work as negotiators on behalf of health insurers and employers to secure deals on drug prices from pharmaceuticals companies, but the industry has been criticised recently amid claims it keeps too great a share of the savings for itself.